diminution of value in all 50 states (00157837) · pdf fileinherent diminished value: this...

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DIMINISHED VALUE CASES IN ALL 50 STATES

When a car is damaged in an accident and then repaired, the resale value may be less than a comparable car that has not been damaged. In other words, the damage

results in a reduction or “diminution” in the resale value of the auto. An insured’s claim for this reduction in value may be made against a third party that negligently

caused the damage to the insured’s auto, or it may arise from a first-party claim against the insured’s own physical damage coverage. The term “diminished value” can

be confusing, and there are three types of diminished value:

1. Immediate Diminished Value: This is the loss of value which results immediately after an accident before any repairs are made. It is the difference in market value

immediately before and after an accident caused by a negligent tortfeasor.

2. Inherent Diminished Value: This refers to the loss of value of an automobile which remains after it is completely and professionally repaired. It is the loss of value

which results from the simple fact that the vehicle has been in an accident. This type of diminished value is also known as “stigma damage.” Given two identical

vehicles on a car lot, the one never damaged is preferable to the one which has been damaged and repaired.

3. Repair-Related Diminished Value: This refers to the additional loss of value to a vehicle which results from incomplete or poorly-performed repairs. It could

include simple cosmetic damages which remain after repair or major mechanical or structural deficiencies.

The most common and widely-used form of diminished value is Inherent Diminished Value. This is the diminished value referred to and made the subject of this chart. In

addition, there are two types of diminished value claims, both of which are discussed in this chart:

1. First-Party Claims: These are claims made by the vehicle owner/policy holder against his or her own insurance company to recover the difference in the value of

the vehicle before the collision and value of the vehicle after the damage caused by collision had been repaired. This type of claim is usually governed by contract

law and the terms of the insurance policy. When a vehicle is damaged, a policyholder generally expects to be “made whole” by its first-party property insurer,

but an insurer is legally responsible only to pay according to the terms of the policy.

2. Third-Party Claims: These are claims made by the owner of a vehicle against a third-party tortfeasor (person other than the insured and the insurer) for negligently

causing damage to the owner’s vehicle. This type of claim is governed by tort law.

http://www.mwl-law.com/


First-Party Claims

With regard to first-party claims, the Insurance Services Office (ISO) contract language (specifically the Limit of Liability Condition) arguably appears to cover only the

Actual Cash Value (ACV) of the damage or the actual cost to repair the damage. There is often nothing in the policy language that would contractually cover any reduction

in market value, even if the insured were able to prove the amount of reduction in value. On the other hand, the policy clearly allows the insurer to deduct for

“betterment” or depreciation, although the burden of proof is on the insurer to demonstrate such depreciation or betterment. In physical damage claims, the policy

allows the carrier to deduct for an “improvement” in value (i.e., betterment) due to repairs with newer parts, but will not compensate the insured for a reduction in value

due to the same accident. There is a disparity among the various states regarding recovery of diminution of value in first-party cases. Insurance claims professionals

should be aware of when and how the laws of each state deal with diminution of value. Georgia is in the minority of states which require insurers to pay the diminished

value as well as the cost of repair of an auto even if the insured does not make a claim for the diminished value.

Third-Party Claims

In third-party claims for property damage to automobiles as a result of a collision for which a third party was at fault, the measure of damages is traditionally - but not

always - the difference between the market value before and after the collision (“diminution of value”) or the reasonable repair value – whichever is greater. Such third-

party diminution claims have generally been found by the courts to be covered by auto insurance since the measure of damage in tort claims (which the insurer promises

to pay) is the difference in the value of the property before the loss and the value of the property after the loss. For example, Texas court cases have found that legal

liability for third-party damages includes diminution of value. Ludt v. McCollum, 762 S.W.2d 575 (Tex. 1988); Terminix Int’l, Inc. v. Lucci, 670 S.W.2d 657 (Tex. App. 1984).

In New Jersey, however, the measure of damages is the difference between the market value of the vehicle before and after the damage occurred. However, if the

vehicle is not substantially damaged and it can be repaired at a cost less than the difference between its market value before and after the damage occurred, the plaintiff’s

damages would be limited to the cost of the repairs. Jones v. Lahn, 63 A.2d 804 (N.J. 1949). Both the cost of repair and diminution in value has traditionally been regarded

as acceptable methods of proving the amount of damage to property in third-party cases. In R & Y, Inc. v. Municipality of Anchorage, 34 P.3d 289 (Alaska 2001), the

Alaska Supreme Court used “diminution of value” as a method of establishing tort damages.

The Restatement of Torts § 928 states as follows:

“Where a person is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for: (a) the difference between the value of the chattel before the harm and the value after the harm, or at the plaintiff’s election, the reasonable cost of repairs or restoration where feasible, with due allowance for any difference between the original value and the value after repairs.”

The following states allow recovery for diminution in value of a damaged vehicle in a third-party claim. Farmers Ins. Co. v. R.B.L. Investment, Inc., 675 P.2d 1381 (Ariz.

1983); Trujillo v. Wilson, 189 P.2d 147 (Colo. 1948); Airborne v. Denver Air Center, 832 P.2d 1086 (Colo. App. 1992); McHale v. Farm Bureau Mut. Ins. Co., 409 So.2d 238

(Fla. 1982); Perma Ad Ideas v. Mayville, 282 S.E.2d 128 (Ga. 1981); Trailmobile Division v. Higgs, 297 N.E.2d 598 (Ill. 1973); Wiese-GMC v. Wells, 626 N.E.2d 595 (Ind.

1993); Halferty v. Hawkeye Dodge, 158 N.W.2d 750 (Iowa 1968); Orillac v. Solomon, 765 So.2d 1185 (La. 2000); Fred Frederick v. Krause, 277 A.2d 464 (Md. 1971);

Hubbard v. Albuquerque, 958 P.2d 111 (N.M. 1998); Rosenfield v. Choberka, 529 N.Y.S.2d 455 (N.Y. 1988); EAM Advertising Agency v. Helies, 954 P.2d 812 (Or. App. 1998);

Newman v. Brown, 90 S.E.2d 649 (S.C. 1955); Averett v. Shircliff, 237 S.E.2d 92 (Va. 1977). It should be remembered that diminution of value of a vehicle after repairs

have been conducted can be difficult to prove and, in some states, the burden is quite high. EAM Advertising Agency v. Helies, 954 P.2d 812 (Or. App. 1998). In some

cases it may be necessary to actually sell it in its damaged condition in order to establish its post-crash market value or, at a minimum, engage an expert appraiser to

provide a detailed report.

The following is a summary of how the first-party and third-party Inherent Diminished Value Claims are treated in all 50 states.


STATE FIRST PARTY THIRD PARTY

ALABAMA

An insurer may not be required to compensate the insured for the difference in the value of the vehicle before the collision and value of the vehicle after the damage caused by collision had been repaired.

Pritchett v. State Farm Mut. Auto. Ins. Co., 834 So.2d 785 (Ala. App. 2002).

No court decisions regarding recovery allowed for diminution in value of

a damaged vehicle in a third-party claim.


ALASKA

Courts used diminution of value in establishing the amount owed in a condemnation proceeding, but currently no Alaska cases are available that deal with a claim for the loss of value of an auto repair by an insurer.

Jackovich Revocable Trust v. State, Dep’t of Transp., 54 P.3d 294 (Alaska 2002).



ARIZONA

Arizona does not allow for first-party recovery, as the courts determined that a contract of insurance will not so provide, and that a plaintiff’s measure of damages is not the difference in the market value of the auto immediately before and after the collision.

Johnson v. State Farm Mut. Auto. Ins. Co., 754 P.2d 330 (Ariz. App. 1988).

Courts agreed with jurisdictions that have “generally held that the measure of compensation to the owner of a negligently damaged motor vehicle may include the cost of repair and proven residual diminution in fair market value.”

Farmers Ins. Co. of Arizona v. R.B.L. Inv. Co., 138 Ariz. 562, 564, 675 P.2d

1381, 1383 (Ariz. Ct. App. 1983).

ARKANSAS

Courts have stated that Arkansas has maintained that the “measure of damages for damage to personal property is the difference in the fair market value of the property immediately before and immediately after the occurrence”, and that “the reasonable cost of repairs may be considered in determining this difference.”

Daughhetee v. Shipley, 669 S.W.2d 886 (Ark. 1984).



CALIFORNIA

Courts have held that, where a damaged auto was repaired to “its pre-accident safe, mechanical, and cosmetic condition”, an insurer’s obligation to repair to ‘like kind and quality’ was discharged according to the policy of insurance— however, recovery for tort damages is limited to the difference between the fair market value of the object before the loss and its value after the loss.

Ray v. Farmers Ins. Exchange, 200 Cal. App.3d 1411 (Cal. App. Dist. 3, 1988);

Moran v. California Dep’t of Motor Vehicles, 139 Cal. App.4th 688 (Cal. App. Dist.

4, 2006).

The Superior Court of the State of California has ruled that James and

Patricia Scott are entitled to diminished value from Mercury Insurance

Company, notwithstanding that their vehicle had been repaired. “Thus, for

future claims against Mercury Insurance Company, the doctrine of

‘collateral estoppel’ should bar Mercury from alleging that a claimant is

not entitled to consideration for diminished value in California,” says Day.

“Furthermore, the denial of such claims on the basis that Californians are

not entitled to claim diminished value against Mercury would be subject


to a violation of the California Insurance Code and should be reported to

the state’s insurance commissioner.”

"[T]he general measure of damages where injury to property is capable

of being repaired is the reasonable cost of repair together with the value

of lost use during the period of injury." (Erlich v. Menezes (1999) 21 Cal.4th

543, 555 [87 Cal.Rptr.2d 886, 981 P.2d 978], internal citation omitted.)

COLORADO

“When an automobile insurer promises to provide an insured with a vehicle ‘of like kind and quality,’ the insurer must provide the insured, through repair, replacement, and/or compensation, the means of acquiring a vehicle substantially similar in function and value to that which the insured had prior to his or her accident.”

Hyden v. Farmers Ins. Exchange, 20 P.3d 1222 (Colo. App. 2000).

Courts have held that “the measure of damage is the difference between its value immediately before its damage and immediately thereafter, together with any expense of reasonable efforts to preserve or restore it.”

Trujillo v. Wilson, 117 Colo. 430, 434, 189 P.2d 147, 150 (1948).

CONNECTICUT

The court has discretion to select the repair measure which stands in as a substitution for diminution in value caused by damage to property in. There are currently no cases available dealing with insurance recovery as differentiated from tort recovery.

Willow Springs Condominium Ass’n, Inc. v. Seventh BRT Dev. Corp., 245 Conn. 1

(Conn. 1998).




DELAWARE

Delaware Superior Court briefly determined that the majority of jurisdictions requiring the insurer to pay for diminution in value was the better view; however the Delaware Supreme Court overruled that decision by stating that by holding that: “We conclude that the language ‘repair and replace’ is not ambiguous and that this language does not contemplate payment for diminution of value.”

Delledonne v. State Farm Mutual Ins. Co., 621 A.2d 350, 352 (Del. Super. Ct. 1992); O’Brien v. Progressive Northern Ins. Co., 785 A.2d 281 (Del. 2001).




DISTRICT OF

COLUMBIA

D.C. courts have allowed for a tort remedy, but they have not addressed the issue

when it involves the coverage available under a policy of insurance. Other

jurisdictions were referenced when they determined that “recovery may be had

for both the reasonable cost of repair and the residual diminution in value after

repair, provided that the award does not exceed the gross diminution in value.”

American Service Center Associates v. Helton, 867 A.2d 235 (D.C. 2005).



FLORIDA

Courts have held that that an auto collision policy which provides that the insurer must repair or replace the damaged vehicle “with other of like kind and quality” does not require the insurer “to compensate the insured in money for any diminution in market value after the insurer completes a first-rate repair which returns the vehicle to its pre-accident level of performance, appearance, and function.”

Siegle v. Progressive Consumers Ins. Co., 819 So.2d 732 (Fla. 2002).

Florida courts have held that “the cost of the repairs made plus the diminution in value will ordinarily be the proper measure of damages, with the burden on the plaintiff to prove in addition to the cost of repairs, that he suffered the additional damage of diminution of value by virtue of the vehicle having been involved in the accident.”

McHale v. Farm Bureau Mut. Ins. Co., 409 So.2d 238, 239 (Fla. Dist. Ct. App.

1982).

GEORGIA

The Georgia Supreme Court has determined that the public policy of the state of Georgia requires insurers to pay the diminished value as well as the cost of repair of an auto even if the insured does not make a claim for the diminished value.

State Farm Mut. Auto. Ins. Co. v. Mabry, 556 S.E.2d 114 (Ga. 2001).

Georgia courts have found that in a third-party action “[t]he measure of damages in an action to recover for injuries to a motor vehicle… is the difference between the value of the vehicle before and after the collision or other negligence” or in a case where the owner repairs the vehicle, damage can be shown by “the reasonable value of labor and material used for the repairs, and the value of any depreciation (permanent impairment) after the vehicle was repaired, provided the aggregate of these amounts does not exceed the value of the vehicle before the injury.”

Perma Ad Ideas of Am., Inc. v. Mayville, 158 Ga. App. 707 (1981).

HAWAII

Hawaii courts have used diminution of value to establish value for the purposes of condemnation, along with using diminution as the method of establishing values for loss to real property.

County of Kauai v. Pacific Standard Life Ins. Co., 653 P.2d 766 (Haw. 1982); Clog

Holdings, N.V. v. Bailey, 992 P.2d 69 (Haw. 2000), Opinion Ordered Depublished

(April 20, 2000).





IDAHO

Idaho courts have addressed diminution by speaking to the requirement, in a suit against a title company, to show some diminution in value of the real property.

Boel v. Stewart Title Guaranty Co., 43 P.3d 768 (Idaho 2002). No court decisions regarding recovery allowed for diminution in value of


ILLINOIS

Evidence of diminution of value will lead to coverage for property damage even though there was no physical injury.

Traveler’s Ins. Co. v. Eljer Mfg., Inc., 757 N.E.2d 481 (Ill. 2001).

Illinois courts have also held that “[t]o expand the ordinary meaning of ‘repair or replace ... with other of like kind and quality’ to include an intangible, diminished-value element would be ignoring the policy’s language or giving the policy’s text a meaning never intended.”

Sims v. Allstate Ins. Co., 851 N.E.2d 701 (Ill. App. 2006).

Illinois courts have stated that “[t]he measure of damages for a repairable injury to personal property, is ordinarily the cost of making the repair and the value of the use of the property while the owner is necessarily deprived of it by reason of the repair.”

Trailmobile Div. of Pullman, Inc. v. Higgs, 12 Ill. App. 3d 323 (1973).

INDIANA

Indiana Supreme Court has found that diminution in value may not be recovered by the insured of an auto policy, and noted that a policy may provide that the insurer may choose to pay either the actual cash value of the vehicle or the amount necessary to repair, not some combination of the two.

Allgood v. Meridian Security Ins. Co., 836 N.E.2d 243 (Ind. 2005).

However, the same court also found that an uninsured motorist carrier must pay diminution of value since it stands in the shoes of the uninsured motorist and must pay tort damages.

Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249 (Ind. 2005).

Indiana courts have adopted the measure of damages as in the Restatement (Second) of Torts, stating that “the fundamental measure of damages in a situation where an item of personal property is damaged, but not destroyed, is the reduction in fair market value caused by the negligence of the tort feasor.”

Wiese-GMC, Inc. v. Wells, 626 N.E.2d 595 (Ind. Ct. App. 1993).

IOWA Diminished value provisions rescinded IAB 4/28/04, effective 4/7/04. Iowa Admin.

Code r. 191-15.43(507B).

Iowa courts have stated that, as it is not unusual to permit recovery for the “reasonable cost of repairing or restoring injured property… if the value of the repaired or restored property is less than the value of the property before the injury, such difference in value is also allowed, in addition to the reasonable cost of repair or restoratio[n].”

Halferty v. Hawkeye Dodge, Inc., 158 N.W.2d 750 (Iowa 1968).



KANSAS

Kansas Supreme Court has determined that the proper measure of damages, where repair fails to restore the property to its former condition and value, is the value of the vehicle immediately before the damage less the value immediately after repairs are made, plus the reasonable cost of the repairs may be applied.

Venable v. Import Volkswagen, Inc., 519 P.2d 667 (Kan. 1974).

Kansas courts have also held that the basic principle of contract damages is to make a party whole by putting it in as good a position as the party would have been had the contract been performed.

Kansas Power and Light Co. v. Thatcher, 797 P.2d 162 (Kan. App. 1990).



KENTUCKY

An insurer is required to restore the physical condition but not the value of the damaged automobile, which was previously followed by the Court of Appeals in Tomes v. Nationwide Ins. Co., 825 S.W.2d 284 (Ky. App. 1991).

General Accident Fire & Life Assurance Corp. v. Judd, 400 S.W.2d 685 (Ky. 1966).



LOUISIANA

The Louisiana Court of Appeals has held that “the insurer’s obligation is satisfied once payment is made for the full and adequate physical repair of a damaged vehicle…”

Campbell v. Markel American Ins. Co., 822 So.2d 617 (La. App. 2001).

Another Court of Appeals case required proof of diminution: “diminution in value of a vehicle involved in an accident is an element of recoverable damages if sufficiently established… where the measure of damages is the cost of repair, additional damages for depreciation may be recovered for the diminution of value due to the vehicle’s involvement in an accident.”

Defraites v. State Farm Mut. Auto. Ins. Co., 864 So.2d 254 (La. App. 2004).

Regarding third-party recovery, Louisiana courts have held that “[i]n a case involving damages to an automobile where the measure of damages is the cost of repair, additional depreciation damages may be recovered for diminution in value attributable to the vehicle's involvement in the accident.”

Orillac v. Solomon, 765 So.2d 1185 (2000).



MAINE

Maine Supreme Judicial Court has found that “the insurer’s liability for a loss

under the policy extends only to the loss that can be repaired as that term is

commonly understood. Because diminution in value is a loss that cannot be

repaired, an ordinary person would reasonably conclude that a claim for

diminished value is not covered by the policy.” Hall v. Acadia Ins. Co., 2002 Me.

110 (Me. 2002).

An owner or subrogated carrier may recover the difference in the value of auto before and after the accident. However, an auto insurance policy, which obligated the insurer to pay lesser of either actual cash value of vehicle at time of loss or amount necessary to repair or replace vehicle, did not mandate liability for diminution in vehicle’s value due to accident despite repair, given that policy’s use of term “repair” was unambiguous, and such diminution was not loss that could be repaired.

Collins v. Kelley, 179 A. 65 (Me. 1935).



MARYLAND

Diminution of value has been found to be appropriate as a measure of damages in a condemnation case.

Reichs Ford Road Joint Venture v. State Roads Comm’n of the State Hwy. Admin.,

880 A.2d 307 (Md. 2005).

Maryland courts have determined that “if [a] plaintiff can prove that after repairs his vehicle has a diminished market value from being injured, then he can recover in addition to the cost of repairs the diminution in market value, provided the two together do not exceed the diminution in value prior to the repairs.”

Fred Frederick Motors, Inc. v. Krause, 12 Md. App. 62 (1971).

MASSACHUSETTS

Courts have stated that they will use usual standards of contract interpretation, and have held that “[n]o ‘objectively reasonable insured, reading the relevant policy language’ would conclude that these terms include compensation for diminution in market value or for anything else beyond restoration of the vehicle’s pre-collision physical condition.”

Given v. Commerce Ins. Co., 440 Mass. 207 (2003).





MICHIGAN

It has been determined that the measure of damages to real property in a negligence suit where the damage cannot be repaired is the difference between the market value of the property before and after the injury; where the damage can be repaired and the cost of repair is less than the value of the property prior to the injury, cost of repair is the proper measure.

Baranowski v. Strating, 250 N.W.2d 744 (Mich. App. 1976).

In construing an insurer’s obligation for payment of a claim to its insured under a theft provision of auto insurance policy, the Michigan Court of Appeals held that the proper construction of the policy is that it covers all damage resulting, or which, in the contemplation of the parties, might result, from theft, which would include damages caused by reckless driving or handling of the car and storage of the same, or any use which destroyed its value in whole or in part.

Wetzel v. Cadillac Mut. Ins. Co., 169 N.W.2d 128 (Mich. App. 1969).



MINNESOTA

Basing their decision partly on the Restatement (Second) of Torts, Minnesota courts have held that the basic rule is one where, when a chattel is damaged, not amounting to total destruction in value, the damages include compensation for loss of use.

In re the Matter of the Commodore Hotel Fire and Explosion, 324 N.W.2d 245

(Minn. 1982).



MISSISSIPPI

Mississippi courts have held both that if, despite repairs, there remains a loss in actual market value, that deficiency is added to the cost of the repairs; and that the measure of loss to an auto damaged but not destroyed by a collision is the difference between its reasonable market value immediately prior to the collision and its reasonable market value after all reasonable and feasible repairs have been made.

Potomac Ins. Co. v. Wilkinson, 57 So.2d 158 (Miss. 1952); Calvert Fire Ins. Co. v. Newman, 124 So.2d 686 (Miss. 1960).





MISSOURI

If policy language is unambiguous regarding no coverage for diminution, the diminished value is not a covered loss and the insurer’s liability was capped at either the actual cash value of the automobile or the cost to repair or replace the damaged auto itself or with parts or property of like kind and quality.

Lupo v. Shelter Mut. Ins. Co., 70 S.W.3d 16 (Mo. App. 2002).

However, the Missouri Court of Appeals has held that “If the insurer, permitted to undertake repairs, falls short of substantial restoration of function, appearance and value, the insured, upon proper showing, can recover damages in an amount equal to the difference between the reasonable market value of the insured automobile immediately prior to the upset and its reasonable market value when tendered to plaintiff after repairs.”

Williams v. Farm Bureau Mut. Ins. Co. of Mo., 299 S.W.2d 587 (Mo. Ct. App. 1957).



MONTANA

The Montana Supreme Court has held that diminution in value is property damage.

Safeco Ins. Co. v. Munroe v. Cogswell Agency, 527 P.2d 64 (Mont. 1974).



NEBRASKA

In the criminal law context, the Court specifically stated that the State had failed to provide evidence, such as the cost to repair the vehicle or the diminution of value of the vehicle due to the fire, to convict the defendant.

State v. Arellano, 262 Neb. 866 (Neb. 2001).



NEVADA Currently no applicable Nevada court decisions can be found regarding recovery

allowed for diminution in value in a first party claim. No court decisions regarding recovery allowed for diminution in value of


NEW HAMPSHIRE Currently no applicable New Hampshire court decisions can be found regarding

recovery allowed for diminution in value in a first party claim. No court decisions regarding recovery allowed for diminution in value of


NEW JERSEY

Courts have held that actual cash value of an auto loss is established as fair market value, and have applied principles holding that when the cost to repair a vehicle is proven, but there exists additional proof showing that even with the repair, the vehicle has depreciated, the plaintiff is entitled to the reasonable cost of repair plus the depreciation, if any.

Fanfarillo v. East End Motor Co., 411 A.2d 1167 (N.J. App. 1980); Hintz v. Roberts, 121 A.711 (N.J. Err. & App. 1923).





NEW MEXICO

The New Mexico Court of Appeals has followed the majority trend toward disallowing recovery for the diminished market value under the terms of plaintiff's policy of insurance.

Davis v. Farmers Ins. Co. of Ariz., 142 P.3d 17 (N.M. App. 2006).

New Mexico has held that “damage awards should provide full and just compensation for the injured party”, and that such compensation is tantamount to the concept of making the injured person whole. It has also been stated that the proper measure of damages for personal property damage will be whatever is less - repair costs plus depreciation or reduction in market value.

Hubbard v. Albuquerque Truck Ctr. Ltd., 125 N.M. 153 (1998).

NEW YORK

In Edwards v. Maryland Motor Car Ins. Co., 197 N.Y.S. 460 (N.Y. App. Div. 1922),

the court held that diminution in value is damage embraced within the clause of

the policy insuring the plaintiff against direct loss or damage by the peril of theft.

The policy contained language that the insurance company had the option to

“repair, rebuild, or replace the property lost or damaged with other of like kind

and quality.” The court found that “diminution in value is damage embraced

within the clause of the policy insuring plaintiff ‘against direct loss or damage’ by

the perils of ‘theft, robbery or pilferage.’” The court went on to state that the

liability is not severed by making the insurance company liable for actual cost of

repairs or replacement. The court notes that this case allowed recovery for

diminished value by finding coverage in another section of the insurance policy

and not due to any obligation to repair the auto with like kind and quality.

In Miller v. Sanchez, 6 Misc.3d 479, 789 N.Y.S.2d 850 (N.Y. City Civ. Ct.

2004), the court accepted the difference in value as the proper measure

of tort damages. If the auto is of the type that appreciates in value, such

as with rare automobiles, third-party diminution of value damages for a

motor vehicle are recoverable in addition to the cost of repairs even if the

repairs restore the vehicle to its pre-accident condition. Franklin Corp. v.

Prahler, 932 N.Y.S.2d 610 (N.Y. App. 2011).

NORTH CAROLINA

North Carolina courts have essentially found that the measure of damages is the fair market value of the car immediately before the collision and the fair market value after the accident: “where the insurer elects to repair the damaged automobile and represents, at least tacitly, that it will place the vehicle in the condition that it was in previously, the insured has no choice but to acquiesce, and the original contract of the parties is converted into a new one, under which the insurer is bound to repair the automobile and restore it to its former condition.”

Pierce v. American Fidelity Fire Ins. Co., 83 S.E.2d 493 (N.C. 1954).





NORTH DAKOTA

The North Dakota Supreme Court has held: “The measure of damages for injury to property caused by the breach of an obligation not arising from contract is presumed to be the reasonable cost of repairs necessary to restore the property to the condition it was in immediately before the injury was inflicted and the reasonable value of the loss of use pending restoration of the property, unless restoration of the property within a reasonable period of time is impossible or impracticable, in which case the measure of damages is presumed to be the difference between the market value of the property immediately before and immediately after the injury and the reasonable value of the loss of use pending replacement of the property.”

Sullivan v. Pulkrabek, 611 N.W.2d 162 (N.D. 2000).



OHIO

Ohio case law has held in particular cases that the insured was not allowed to recover diminution in value of a damaged auto under the particular policy, and that that there was no cause of action for diminished value of an auto.

Nationwide Mut. Ins. Co. v. Shah, 2004 Ohio 1291 (Ohio App. Dist. 5, 2004); Kent

v. Cincinnati Ins. Co., No. CA2001-04-100 (Ohio App. Dist. 12, 2001).

When a plaintiff proves that the value of his automobile after repair is less than the pre-injury value of the automobile, the plaintiff or subrogated carrier may also recover the residual diminution in value in addition to the cost of repair, provided that the plaintiff may not recover damages in excess of the difference between the market value of the automobile immediately before and after the injury.

State Farm Mutual Automobile Ins. Co. v. Cheeks, 2014 WL 470874 (Ohio

App. 2014; Rakich v. Anthem Blue Cross and Blue Shield, 875 N.E.2d 993

(Ohio App. 2007).

OKLAHOMA

Oklahoma has held that “unless the collision resulted in a total loss of the automobile plaintiff’s measure of recovery was the difference between the fair market value of his automobile in the condition in which it was immediately prior to the collision, and its value thereafter. If the collision resulted in a total loss of the auto his measure of recovery was the fair market value thereof in the condition in which it was immediately before the collision.”

Phoenix Ins. Co., Hartford, Conn. v. Diffie, 1954 OK 146 (1954).



OREGON

The Oregon Supreme Court has stated that the insured was entitled to the difference between the pre-loss and post-loss value of the vehicle and the proper repair of the car may not accomplish this result, and that a complete restoration of the property has not occurred unless there has been no diminution of value after repair of the auto.

Dunmire Motor Co. v. Oregon Mut. Fire Ins. Co., 114 P.2d 1005 (Or. 1941).

Court of Appeals of Oregon acknowledged potential acceptance of evidence of diminished value, but found that such evidence was not presented.

EAM Advertising Agency v. Helies, 954 P.2d 812 (1998).



PENNSYLVANIA

The Supreme Court specifically noted that, with regard to remedial damage to realty, a plaintiff may recover only the cost of repair or restoration without regard to the diminution in value of the property, and has also stated in a separate case that it was unaware of any circumstances where an insurance company reimbursed the insured for diminished value. The Court also held that such payment would not be the norm, and could not form the basis for a reasonable expectation by the public.

Lobozzo v. Adam Eidemiller, Inc., 263 A.2d 432 (Pa. 1970); Munoz v. Allstate Ins. Co., No. 9906-2855 (Pa. D. Nov. 15, 1999).



RHODE ISLAND

A Rhode Island Superior Court denied an insurer’s summary judgment as to diminution of value in a case addressing policy language, finding found that an ambiguity existed as to whether or not “the cost of repair or replace the property with other of like kind and quality” includes damages for the inherent diminished value of an automobile resulting from the vehicle being in an accident. The Court held where a dispute existed with respect to the parties’ intent, there existed a genuine issue of material fact that must be resolved by the jury.

Cazabat v. Metropolitan Property & Casualty Ins. Co., 2000 WL 1910089 (R.I.

Super. Ct. 2000).



SOUTH CAROLINA

South Carolina courts have held that where the policy language clearly “expressly limits coverage to the lesser of the actual value or the cost of repair” the Court would determine that “[t]hese are alternatives, which do not include an additional obligation to pay for diminished value when the cost of repair is chosen.” The court also would not read into the cost of repair an additional requirement to also pay for diminished value since, to do so, would render the limitation provision meaningless.

Schulmeyer v. State Farm Fire & Casualty Co., 579 S.E.2d 132 (S.C. 2003).

South Carolina has held that “the cost of the repairs made… plus the (remaining) diminution in value of the property will ordinarily be the proper measure of damages.”

Newman v. Brown, 228 S.C. 472, 477, 90 S.E.2d 649, 652 (1955).

SOUTH DAKOTA

The South Dakota Supreme Court followed the majority rule and refused to allow recovery of diminished value after the full repair of a vehicle and applied the clear language of the insurance policy.

Culhane v. Western Nat’l Mut. Ins. Co., 704 N.W.2d 287 (S.D. 2005).




TENNESSEE

The Tennessee Court of Appeals refused to apply diminution of value in Tennessee auto policies finding the wording unambiguous and limiting the insured to repairs.

Black v. State Farm Mut. Auto. Ins. Co., 101 S.W.3d 427 (Tenn. App. 2002).




TEXAS

Texas courts have refused to allow recovery of diminution of value, and have stated that “[w]here an insurer has fully, completely, and adequately ‘repaired or replaced the property with other of like kind and quality’ any reduction in market value of the vehicle due to factors that are not subject to repair or replacement cannot be deemed a component part of the cost of repair or replacement.”

American Manufacturers Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154 (Tex. 2003).

The Texas Department of Insurance Bulletin B-0027-00 (2000) has also held: “The

position of the Department is that an insurer is not obligated to pay a first party

claimant for diminished value when an automobile is completely repaired to its

pre-damage condition. The language of the insurance policy does not require

payment for, or refer to, diminished value.”



UTAH

Utah courts have held that the measure of damages for an injury to personal property which has not been completely destroyed is the difference between its value immediately before and immediately after injury, or, if such sum be less, the reasonable cost of repairs to restore the property to its previous condition.

Angerman Co., Inc. v. Edgemon, 290 P. 169 (Utah 1930).



VERMONT

Although there are currently no decisions regarding first-party recovery for diminution in value, in the case of a homeowner’s policy covering the insured for claims brought against them for “property damages” due to toxic material in the walls, where the insured claimed to have lost much of the beneficial use of the property—they can no longer live there without injury, and the property’s resale value is diminished—the court held that the homeowner’s policy was required to indemnify the insured for the diminution in value.

American Protection Ins. Co. v. McMahon, 562 A.2d 462 (Vt. 1989).




VIRGINIA

The Virginia Supreme Court has refused to compensate an insured for the loss of his new car warranty where the policy did not make such an agreement and the diminution in value was not recoverable under the policy.

Bickel v. Nationwide Mut. Ins. Co., 143 S.E.2d 903 (Va. 1965).

Where an auto has been damaged but not totally destroyed and it is reasonably susceptible of repairs, the measure of damages is the cost of repairs and any diminution of the auto’s market value which results from the car having been injured after the repairs; that is, the cost of repairs plus any amount of depreciation in value of the vehicle as repaired.

Averett v. Shircliff, 237 S.E.2d 92 (Va. 1977).


WASHINGTON

The Washington Supreme Court in the dissent of a non-auto case, on subjects not involving diminution, stated the general rule that: “Damages for injury to property are measured in terms of the amount necessary to compensate for the injury to the property interest... Therefore, damages for injury to property are limited under Washington law to the lesser of diminution in value of the property or the cost to restore or replace the property.”

Certification From United States Dist. Court for Western Dist. of Wash. v. Aetna Casualty & Surety Co., 784 P.2d 507 (Wash. 1990).

The Washington Supreme Court has also stated that, where the damage to real property is permanent, a plaintiff is entitled to recover, not only for the costs of restoration and repair, but also for the property’s diminished value.

Kurtis R. v. Sto Industries, Inc., 132 P.3d 115 (Wash. 2006).



WEST VIRGINIA

The West Virginia Supreme Court, stated that “[i]f the vehicle looked and operated substantially the same after the accident but its market value had been diminished by the fact of being in an accident, then to be adequately compensated, the injured party must receive, in addition to the cost of repairs, the diminution in market value stemming from the injury”, but this should be narrowly construed with proof of the diminished value, structural damage to the vehicle, and only for a vehicle with “significant value” prior to the accident.

Ellis v. King, 400 S.E.2d 235 (1990).



WISCONSIN

Wisconsin courts have determined that plaintiffs may be “entitled to either the reasonable cost of repairs or the diminution in fair market value of the vehicle, whichever is less.” However, an owner is entitled to cost-of-repair damages and loss-of-value-after-repair damages if the owner proves that the repairs to the vehicle did not restore the vehicle to its pre-injury value.

Paulson v. Allstate Ins. Co., 649 N.W.2d 645 (Wis. App. 2002); Hellenbrand v. Hilliard, 687 N.W.2d 37 (Wis. App. 2004).




WYOMING

In a construction defect claim, the Wyoming Supreme Court has found that diminution of value was an element of damage in an inverse condemnation case.

Miller v. Campbell County, 901 P.2d 1107 (Wyo. 1995). No court decisions regarding recovery allowed for diminution in value of


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